The Federal Government and state governors may have agreed to a three-month moratorium on Local Government autonomy, over concerns arising from its impact on salary payments and operational viability.
The development means Local Governments may wait till October before the implementation of the law in the direct payment into their respective accounts.
The Supreme Court, on July 11, 2024, gave a landmark judgment affirming the financial autonomy of the 774 LGs in the country and ruled that governors could no longer control funds meant for the councils.
The apex court also directed the Accountant-General of the Federation to pay LG allocations directly to their accounts, as it declared the non-remittance of funds by the 36 states unconstitutional.
Under former President Muhammadu Buhari, the Nigerian Financial Intelligence Unit issued a regulation, effective from June 1, 2019, which banned transactions on State and Local Governments Joint Accounts. Funds were sent directly to the accounts of the local governments. It also limited cash withdrawals from local governments accounts to a maximum amount of N500,000 per day with penalties for banks that failed to comply. The Nigerian governors under the aegis of the Nigerian Governors’ Forum kicked against this regulation and the NFIU eventually capitulated.
The status quo was maintained until May 2024 when the Attorney-General of the Federation, Lateef Fagbemi (SAN), filed suit marked SC/CV/343/2024 at the Supreme Court to strengthen the autonomy of the local government areas as guaranteed by the constitution. It sought to prevent state governors from unilaterally dissolving democratically elected local government councils and establishing caretaker committees, actions that violate constitutional provisions. The AGF argued that the constitution mandates a democratically elected local government system and does not allow alternative governance structures.
The suit also prayed that the funds from the Federation Account be channelled directly to local governments, bypassing the allegedly unlawful joint accounts managed by state governors. The Federal Government also sought an injunction to stop governors and their agents from receiving or spending local government funds without a democratically elected local government system in place. It contended that the governors’ failure to establish such a system constitutes a deliberate subversion of the 1999 Constitution. The Supreme Court heard parties to the case on June 13, with the state governments, through their respective attorneys-general, opposing the suit.
That was the prelude to the Supreme Court judgment of last Thursday, July 11, 2024, which has now affirmed the financial autonomy of Nigeria’s 774 local governments. In the unanimous judgment of its seven-member panel, the Supreme Court upheld the suit brought by the federal government to strengthen the independence of local governments in the country.
A member of the panel, Emmanuel Agim, who delivered the court’s lead judgment, held that the local governments across the country should henceforth receive their allocations directly from the Accountant-General of the Federation. He ruled that it is illegal and unconstitutional for governors to receive and withhold funds allocated to local government areas in their states.
Many Nigerians, including the LG chairmen, hailed the judgment of the Supreme Court, describing it as a step in the right direction to restructure the country.
Although some governors voiced their concerns, the Nigeria Governors’ Forum, speaking through the chairman and Kwara State Governor, AbdulRahman AbdulRazaq, said the judgment was a relief from the financial burden to state governments.
AbdulRazaq, speaking to journalists after meeting President Bola Tinubu on July 12, a day after the judgment, said, “The governors are happy with the devolution of power regarding local government autonomy. The public really doesn’t know how much states spend on bailing out local governments.”